Economy & Budget

Tax Time

Last year, I decided to pursue a dream that I have had for a while. I wanted to work for myself. After spending a decade and a half in the Congress and a couple of years working for a large trade association, I took the opportunity to open my own strategic consulting shop.

Now, the good news about opening a consulting shop is that you don’t need a lot of overhead. I have thought about hiring a couple of employees, but I am concerned about the excess costs associated with that process.

My tax burden is one of the biggest excess costs. I get killed with taxes. I basically pay half my income to Uncle Sam. It is ridiculous.

Heading Toward the American Derailment

Headline in The New York Times: "81% SAY NATION IS HEADED ON WRONG TRACK.”

Question to the other 19 percent: WHAT ARE YOU SMOKING?

Wherever we look, we see the American dream suffering a rude awakening.

The Constitution's promises have been frequently swept aside by heavy-handed government officials who are motivated by simple-minded expedience more than a tradition of civil liberties that is supposed to make us unique.

A Clinton Story, Disinterred

I learned Monday, before an appearance on Fox News, of a story on their network's website I hadn't seen anywhere else — that Sen. Hillary Rodham Clinton's (D-N.Y.) campaign manager, Maggie Williams, was working until December of 2007 for Delta Financial Corporation, a predatory lender. Not only that, but Williams sat on the board of what was once one of the largest (but is now bankrupt) sub-prime mortgage lenders as one of its directors for seven years.

The Fox News story included the proverbial quotes from Clinton about the damaging effects of the sub-prime crisis and how lenders share most of the blame for the mortgage mess. "I am reminded every day as I meet with families and listen to their stories that the effective functioning of our financial markets isn't just about Wall Street. It's about Main Street," she said recently.

Republicans Endorse Greed

To my brother John Feehery: As you accuse the American people of greed, you embrace the mindset that will lead to a titanic Republican debacle in congressional elections this fall.

This is the difference between you and me, and between Republicans and Democrats in general.

I love your argument. You offer the politics of Gordon Gekko, the Michael Douglas character in the movie “Wall Street”: that "greed is good.” You repeat it word for word. I love it!

'Ethic of Greed'

Barack Obama blames lobbyists, greedy businessmen and complacent Washington politicians for creating an "ethic of greed," which he says has caused the foreclosure crisis.

He left out one big group. The rest of the American people.

Greed drives the economy. Greed creates jobs. Greed makes America the No. 1 consuming nation in the world. American greed not only helps the American economy. It helps the world economy.

Will This Campaign Ever End?

According to the Drudge Report, Barack Obama is in the Virgin Islands, on vacation.

Hillary Clinton is explaining why she misremembered her trip to Bosnia a decade ago. Apparently, there were no bullets whizzing overhead after all.

John McCain laid out a perfectly sensible plan to deal with the mortgage crisis. His first principle seems to be “Don’t do anything really stupid,” which I think is a pretty good principle.

The stock market is in a tug-of-war between bargain-hunters who want to scoop up undervalued stocks and short-sellers who are bad-mouthing every company out there that might be vulnerable. Some Bear Stearns employees are hunting for those short-sellers so they can wring their necks.

Trade Negotiator and Civility Promoter in Chief

Last week, I wrote about the successful Institute for Education/INFO policy breakfast with Ambassador Susan C. Schwab, United States trade representative. The ambassador has a critical mission in negotiating with foreign governments to create trade agreements, resolve disputes and participate in global trade policy organizations. The ambassador meets with governments, business groups, legislators and public interest groups to gather input on trade issues and explain the president’s trade policy positions.

Though free trade agreements involve a mutually agreeable pact by the foreign and U.S governments, both Sens. Hillary Rodham Clinton (D-N.Y.) and Barack Obama (D-Ill.) appear to be isolationists. Fear has grown in the U.S. that by engaging in a trade agreement, we run the risk of losing our competitive edge to developing countries. Since when has competition become a bad word? This fear may not be unfounded — but it is misguided. Job loss is not stealing jobs. It is competition. The race to be a low-wage country is not a race that the U.S should have any interest participating in. China has its share of job losses and factory closings — to Vietnam. The name of the game, today and for our future, is global competition. Innovation and the spirit of entrepreneurship will allow flexibility in creating new markets, new products and services.

Foreclosed Homeowners, Incompetent Banks, and Moral Hazards

When Congress returns from recess there will be an enormous debate about helping foreclosed homeowners and average Americans versus helping major investment houses at taxpayer expense.

For now, one point — the Fed-supported deal for J.P Morgan to buy Bear Stearns for $2 a share included one of the greatest fiascos in financial market history.

In the contractual agreement between J.P. Morgan and Bear Stearns is a "mistaken provision" that requires Morgan to guarantee Bear Stearns trades, even if Bear Stearns shareholders vote down the deal.

In short, if one believes the deal was urgently needed for Bear Stearns to avoid bankruptcy, the cost to J.P. Morgan of guaranteeing Bear Stearns trades, even if the deal is voted down, is catastrophic to Morgan.

A Correction is in Order

Much has been said and written lately regarding the state of the economy and all the factors that have led us to the brink of recession. There’s no way I can do the situation justice in a mere 400 words, so let me just state that the economy needs a correction. To put it another way, what goes up must come down. And the longer the Fed and others try to defy economic gravity and keep a $13 trillion economy floating on nothing but speculative air, we’re delaying the inevitable. And the sooner we can get this correction behind us, the sooner prices can ease, markets will stabilize and some semblance of equilibrium can return to a skittish investor class.

This past week’s action on Wall Street is a perfect example: Following the Fed’s decision to pump $30 billion in guaranteed loans to prop up the floundering brokerage house Bear Stearns, traders jumped in glee, sending the market up hundreds of points. Just 24 hours later, however, traders gave all those gains back. The Fed’s actions had merely bought us a day’s worth of confidence. Yawn …

Trade Negotiator in Chief

Ambassador Susan C. Schwab, United States Trade Representative, spoke at last week’s overflowing Institute for Education/INFO policy breakfast. IFE/INFO forum regular Craig Helsing referred to all five of her titles: doctor, dean, general, honorable and ambassador. Not bad! It was an honor to host her, especially with the pending free trade agreements and so much discussion on the free trade debate this 2008 primary season. Ambassador Schwab is at the nexus of Tom Friedman’s flat world.

President Bush’s last State of the Union address prominently featured trade talk. He spent more time on it than in any other State of the Union. It is a big issue on the campaign trail, especially for the Democrats. Nominees Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) seem to be all over each other on this issue.